This is the fifth installment based on my HR Insights podcast.
In this post, we will be considering what actions to take when the worst case scenario happens and you have to contemplate redundancies. We will be answering the following questions:
- What actions do I need to take when contemplating redundancies?
- Who do I need to consult with?
- When and how?
- And what government support is there for me and my staff?
I'm going to take you through some practicalities. But this should not replace legal advice, and I must stress to you the importance of seeking appropriate advice when contemplating redundancies. The law in this area is complex. You can also visit the ACAS guide to managing staff redundancies for further guidance.
A recent McKinsey report anticipates that UK GDP will fall by 9% in 2020, meaning that about 7.6 million people are under threat of being laid off, remaining on furlough or having their hours and pay cut. There are already a number of organisations facing real difficulties because of the impact that Covid-19, is having or has had on their business. A survey of 500 People Management readers indicated that 42% expect to make a limited number of redundancies when the furlough scheme closes. We are already seeing this in the news with large scale redundancies recently announced. Many of the at risk jobs are in occupations earning less than £10 per hour in hard hit sectors such as hospitality, arts and culture and retail.
So firstly, what is the definition of redundancy? It is detailed in the Employment Rights Act and describes the following four scenarios:
- The employer ceases to carry out the business in which the employee was employed.
- The employer ceases to carry out that business in the place where the employee was employed.
- The needs of the business for employees to carry out work of a particular kind ceases or diminishes, or;
- The needs of the business for employees to carry out work of a particular kind in the place where the employee was employed ceases or diminishes.
Note that this definition covers ceases or diminishes. So if your business is experiencing a diminishing demand rather than no demand. This could also be a redundancy situation. This is also the definition that is relevant for the purposes of determining whether or not an employee is entitled to a redundancy payment.
As with many HR processes, approaching redundancies should be done in a structured manner. The first step that I always discuss with an employer is to explore in some detail the background as to why they are at the point of determining redundancies. The reason why this is important is because the business needs to draft a redundancy plan detailing quite specific information. You can view my redundancy plan template here which includes the following areas.
- An overview of the organisation or area that is facing redundancies.
- The drivers to the situation. This will almost certainly be financial, but just now it will also be closely linked to the pandemic, Covid-19.
- What alternatives to redundancy have they considered? This is important because not only is it nearly always covered in redundancy policies, but employers need to try and save jobs, and these actions can help. Such alternatives may include a ban on recruitment, seeking voluntary redundancies, ending fixed term contracts, reducing hours or pay, etc.
- We need to think about which posts will be at risk of redundancy. The numbers and types of jobs and the pools of staff.
- The collective and individual consultation that will be required. This will depend on the numbers of posts at risk.
- How the organisation will seek to continue to communicate and support staff throughout the process.
- Detail of the process they'll be using, including any selection criteria and the timeline, including consideration of feedback from consultation. I would take these in turn as there are some specific points I want to cover.
Firstly, it is really important to take your time before heading straight into consultation. Employers need to ensure they have a clear, reasoned proposal backing up why they are facing the difficult decision to terminate people's contracts of employment on the basis of redundancy. As with many of the things we are facing at the moment with Covid-19, it is highly emotive. None more so than when you are ending someone's income. You need clarity and rationale. You need to demonstrate that you have considered this very carefully and you may also need evidence of discussion and agreement at board or trustee level.
So take your time. This redundancy plan is an important document because you'll be sharing this with staff and trade unions if you recognise them as part of the consultation process. One of the alternatives to redundancy that you will need to factor into your timeline is the Coronavirus job retention scheme, or furlough, which I covered in the first episode of this podcast series. An obvious question that staff and trade unions will want to ask is why now? Why can't you keep staff on until the end of furlough? It's the obvious alternative to redundancy and therefore you must consider this. So maybe once you have a fuller picture of the impact Covid 19 has had on the organisation and the posts at risk, you might decide to keep some staff on furlough and perhaps proceed with a smaller number of posts at risk of redundancy. Another alternative to redundancy might be to terminate early any fixed term contracts. For example, if you took on staff to perform a specific project or to undertake seasonal work, which is no longer required. Be aware that the number of these contracts that you terminate will need to be included in the overall number of redundancies for the purpose of collective consultation
You will have to consult with staff regarding the redundancies. The purpose of consultation is to reach agreement on the matters discussed. If you are making less than 20 staff redundant, there is no need to collectively consult with staff. But you will need to consult with them on an individual basis. If you are considering making redundant 20 or more posts at one establishment within 90 days or less, then you will need to collectively consult for at least 30 days before the first dismissal takes effect.
If you are making more than 100 posts redundant, then you have to collectively consult for 45 days before the first dismissal takes effect. This is important. Failure to consult collectively in these circumstances can lead to claims being made as an employment tribunal. And if a protective award is granted, then that's the equivalent to 90 days pay for each employee where there was a failure to consult. So it can be a really expensive mistake to make.
In a collective redundancy situation where 20 or more employees are at risk at one establishment over a rolling 90 day period, then employers will also need to potentially go through a process of electing employee representatives unless there is already a suitable employee group to consult with. This could take up to two weeks to complete and consultation can't begin until it is complete. So this will need to be planned carefully in advance and included in your timeline. Consultations allow you to explain to staff why you're planning redundancies. You should discuss the following as a minimum.
- Ways to avoid or reduce the redundancies.
- How to reduce the effects of the redundancies.
- How the organisation can restructure or plan for the future and how employees are selected for redundancy.
Make sure that you extend an invitation to everyone who is affected, including those who are absent on family leave and those on long or short term sick. They should all be included. I recommend you tell people why they are being invited to a meeting. I think most people aren't going to be surprised in the present circumstances. Just be open. It always pays. And you want to try and maintain that level of trust between you and your staff. Those who are provisionally selected for redundancy, must also be consulted individually, although this can take place within the collective consultation period.
Reassure each person that no decision has yet been taken. There's any feedback they give to you will be carefully considered and ensure they feel that they have a voice. You should offer them at least two individual consultation meetings and allow them to be accompanied if they wish. It's good practice and I feel it can help when people get either upset or angry. Now, another thing to add in here is that at present, all of these meetings are being held virtually rather than being carried out face to face. It is much harder during this via zoom. It's intense in a different way and quite a stressful experience. So be prepared for that as you embark on this journey. Finally, try and have a note taker available to ensure that feedback is captured and that any actions are followed up. All meetings should be followed up and confirmed to the employee in writing. Be clear in your communications with staff for verbal briefings or meetings, you might need a script, and that's absolutely fine. Just speak plainly and clearly. If necessary run your communication past a few people close to you before you have to deliver the news. In written communications with staff don't use big business words, but instead use plain English. Consider how you will communicate with staff who aren't currently at risk. You may wish to write to them as well, confirming in outline the situation affecting their colleagues and the timeline.
I would always recommend that you consider additional ways in which to communicate during a redundancy consultation period. The use of frequently asked questions is a good way of ensuring that staff are kept up to date with additional information. For example, during consultation meetings, when one person asks something about the process or raises another query, you could share that information with other people. Quite often if one person is asking the question, there's a lot of other people who are also thinking it. Ensure there is sufficient time at the end of the consultation period to consider fully all of the feedback you have received.
Go back to the at risk staff and ensure that they know what is being changed and what isn't. What feedback was taken on board and what has not been taken forward. These are unprecedented times. So expect unprecedented responses. Staff might be prepared to take a significant pay cut or a reduction in their hours in order to keep their job. Consider also whether there are any alternative roles and present all possible alternatives to them. If you are applying selection criteria to a pool of at risk staff, ensure they are as objective as possible. They usually include standard of work, skills, qualifications and experience, disciplinary record and attendance record. Selection criteria must be fair and non-discriminatory. So absences related to family leave or disability should be discounted. Ideally, you should consult employees to identify and agree selection criteria. And finally, ensure that you have a small but consistent group of people scoring and consider the involvement of more than one manager and possibly trade union representation in the scoring process.
Finally, you will need to inform those affected of the outcome. Those who are made redundant, you will inform in writing and confirm whether they are entitled to any redundancy payments. By law, only those with over two years service will be eligible for a statutory redundancy payment. Check your contracts of employment and handbook in case there is any difference to this, such as enhanced redundancy payments. Redundant employees will also be entitled to notice and pay for any accrued holidays not yet taken. If notice is given to run concurrently with furlough employees pay should in most cases be topped up to their normal pay. And finally, consider the support that should be offered to staff those with over two years service are usually afforded assistance with getting other work and time off to attend interviews.
If you are making more than 20 staff redundant and have submitted an HR1 form, then you will get assistance from the government in the way of partnership action for continuing employment PACE in Scotland or Jobcentre Plus in England, which can offer individual support. If you have anyone who is pregnant or on maternity leave, i.e. within the maternity protected period, and whose role is one of those at risk, you should seek particular legal advice about this. They shouldn't be placed at a disadvantage and nor should their being on maternity or other leave influence their selection for redundancy.
They should be consulted as part of the redundancy consultation process. You could get them to use one of their keep in touch days and remember, they should also receive all communications from you. And finally, it is good practice to offer an appeal to those dismissed on grounds of redundancy. Try and ensure those who are involved in hearing the appeals haven't been involved before in the process.
The way in which employers approach furlough and redundancies, how they communicate with and treat their staff will be a long lasting legacy, one which may affect customers behaviours and potentially job candidates in the future. Candidates and customers are likely to remember these decisions and how they were taken for some time so try and do it fairly and with as much compassion and empathy as possible.
Interview with Kris Bryce, Exec Director, Pitlochry Festival Theatre:
Today, I'm joined by Kris Bryce, Executive Director, Pitlochry Festival Theatre. Kris has a range of experience in redundancy situations and he has come along today to share some of these experiences with us. Thanks for joining us, Kris, welcome.
Hi Caroline. Thanks for having me.
So first, Kris, I thought it would be helpful just to give some context to our listeners. If you could just tell us a little bit about the roles that you've had, where you've had to contemplate redundancies.
Yeah, absolutely. You've touched on my role at Pitlochry Festival Theatre, we're the largest employer in Highland Perthshire and employ on a regular basis permanent roles just under 100 employees. And that rises across the year to 200. So over the last four years, I've really been looking at where the organisation is going. And there's been challenges that we're all facing in the current context with the Coronavirus and where the economy is heading and the uncertainty.
I suppose, previously over the last 10 years, business restructuring and business growth has very much been in my portfolio. So previously to Pitlochry Festival Theatre, I was at Dundee Rep Theatre and then prior to that I was at Dundee Contemporary Art. So I suppose the story over the last 10 years has very much been about business growth. And in my time we've looked at business restructuring and TUPE situations of both outsourcing and insourcing groups and small processes and then more widespread collective consultation as well, where we've worked with employee representatives on groups .
And I suppose in board roles, non-executive director roles, I am a director with Stellar Quines, which is Scotland's touring theatre company for women and girls. And I'm also elected to the Board of UK Theatre, which is the membership body for the performing arts in the country. And as part of that, I am on their well-being committee looking at the future of the workforce. Obviously the conversation with the Wellbeing Committee at the moment is very much focused on the impact of the pandemic.
I'm sure that there's a lot of work that's needed in both UK theatre and particularly in that working group Kris?
Yeah, that's absolutely right. And I think as the weeks and months have gone by and we've moved from the acute stage of crisis into a longer term and more chronic period, it's understanding what's coming towards us and how we can both support the industry and support the individuals to survive this period and ensure that there's future for the industry. And actually we can respond to the economic pressures that we're all facing.
Thank you.That's really helpful to get some context from you. One of the first things I recommend for employers who are contemplating redundancies is to take their time. What would you recommend for employers, particularly consider as part of the planning process before starting any consultation?
Yeah, I think that point about time is very well made and I can't agree enough, I don't think. For me understanding what is being solved or what is the topic of conversation. So not rushing towards something going, we need to change this, but retaining that helicopter view of where we are going, what is coming towards us and what do we need to achieve? So spending the time, really digging into the situation and seeing what the other opportunities are.
Certainly redundancy is inevitably going to be the last place you get to and need to go. Really, in my experience, you need to go through all the other solutions of what we are trying to achieve? How can we achieve it? Why is that not within our grasp at the moment? And then crucially, I suppose, what does redundancy solve for us? Because it's not just a miracle cure where all of a sudden you apply a redundancy situation, you come out of it and everything has been resolved.
Actually, there is a specific purpose, I suppose I mentioned earlier about business restructuring or outsourcing, insourcing. And these are all situations where redundancy might come about, but they're all very different situations. And certainly the pandemic has impacted all of us in very, very, very different ways to anything we've seen previously. And redundancy for some organisations is unfortunately the only way that they can see forward out of this. Again, many other organisations are thinking redundancy isn't right for us right now. So I suppose it's taking the time, as you say, understanding what's being solved. And inevitably and I know you've heard me say this a number of times, Caroline, in every situation, but leaning into your values and doing it in the right way for you and your organisation and the people in the organisation.
That's helpful, Kris. I think particularly in terms of at the moment, in order to take our time, we do have the furlough scheme, which although we know that it's going to end at the end of October, that does give businesses some time to take that time and consider actually what their approach will be to redundancies.
Absolutely. And I think that's a perfect example of really needing to understand what's coming down towards the organisation, understanding what the impact is on the organisation before committing to anything.
Retaining that helicopter view, though, inevitably means that your point of view is going to be very different to somebody else who isn't considering that. So for many people on the 31st May hearing the chancellor's announcement about the extension of the furlough scheme, it was absolutely brilliant news because they felt very confident that actually for them in their organisation or for their organisation, this ensured a level of stability right through until November. And it was when individuals started digging into it and understanding what the commitment and what the cost implications of it were. I suppose they started to see. Well, by September. By October. What does this mean for my organisation? What do I know now here at this point in time? And then we were still in May. What can we plan for? And so I suppose going back to that helicopter view and just going right now, how does this impact us? And how do I prepare both the organisation and the individuals for it where it's taking us?
That's a really good point, Kris. I'm going to come back to that in a moment, particularly thinking about the individuals. So if we can move on to thinking about the consultation processes, can you share that with the listeners some specific tips that you've learned along the way in terms of the consultation process, both individually and collectively with trade unions?
Yeah, absolutely. I think my learning over the last 10 years encountering various individuals in various situations is that the process is theirs and they have to be at the centre of the process. You need to be present in every exchange. Oftentimes, if you're consulting and with a number of different people, you might be speaking to five or six people in a day or across a week about a redundancy process. For every one of those individuals, that is their moment to have their discussion, have you in the room with them and to be able to engage with you and problem solve because effectively, redundancy is generally about problem solving. There is a challenge which needs to be resolved, whether that's a restructure to grow the business or it's about outsourcing an area to business to achieve a better result or insourcing and involving another organisation. There is something that is being resolved to improve. And so being present and being your authentic self as well. I mean, this comes out in so many different ways in leadership.
But if you go into the room, if you go into the consultation and you're not being authentic, it's going to dramatically impact and undermine the process that you're in. And I suppose that links to me about clarity and the time that's taken beforehand to understand what's being resolved. When you go into a room people don't want and it's not right for them or the process for you to go, well, this is what we're trying to achieve and I think this is the best way. The clarity of vision of this is where we're at, this is what we're trying to do. What do you think? Here's our proposal. What's your proposal? And being responsive to those individuals, taking them on board, taking them at face value and ensuring that not only are they hearing you, but you're hearing them and they're being brought along on the journey.
I think that's very helpful to just remind us that we have to be open to the feedback that we're going to receive. We have to be seen to be open as well. That we are entering the consultation process with decisions not having been made. And we want to hear your views. It's really important, isn't it?
I think that's absolutely right. I think the only decision which has been made at the start about redundancy consultation is that there is a question about a problem which might be solved or a situation which might be solved. Any other conclusion at that point is unhelpful because it gets in the way of the best potential solution. And certainly, in my experience, you just don't know what people are going to bring into the room and tell you. In your role in the organisation, you can't know absolutely every facet of how individuals do their job and what information they might be holding on to. And so not listening or not asking the questions or not providing the environment in which people are able to share with you. And inevitably useful to remember that when the adrenaline kicks in for people in a redundancy process, at the moment that a redundancy process or a consultation is announced, they start to close down and you have to create a situation in which they can open up and speak to you.
I think we all know that when their adrenaline hits us. We've seen people go into fight mode. They go into flight mode. They go into freeze mode. And it's up to us as leaders and individuals running a redundancy process, consulting with people to take them away from the fight mode, take them away from the flight mode, take them out of freeze so that actually they can open up and consult. And oftentimes people will come up with the same solution that you're working towards in their own terms, which is an interesting process to observe as well, because in consultation, if you're genuine, you're collaborating to find a solution.
If it's a well-defined situation that's being resolved, there might be a well-defined answer. And in consultation, oftentimes everyone lands on the same answer ultimately. But if you're not authentic about what's going on, it just gets in the way and can also cause bad feelings which just start to build barriers towards getting any kind of resolution.
Yes, which you definitely don't want to get to that point, do you.
Well, it's not helpful for the organisation. It's not helpful for the individual. For many people going into the redundancy consultation process, this is the most important thing that's going to happen in their careers. And whether they have been in that particular workplace for a very long time or are later in their career, but new to the role or new to their career and new to the role. This is a significant moment for them, and it's a moment of transition as well, because regardless of what the outcome of the consultation is and whether a proposed role is ultimately made redundant or is ultimately retained, it's a marker in their relationship with the organisation. And I suppose that psychological contract that we as organisational leaders are responsible for with the individuals, we don't create it, but we're responsible for guarding it. Redundancy consultation is a significant moment in that contract.
Absolutely. And then finally, and this is something that you've already really touched upon. I think communication is so key, particularly in these situations. Can you tell us in what ways you have tried to improve the communication between the organisations and the at risk staff? What tips would you advise others to use?
I think accepting upfront that anything that's ever done is never going to be deemed enough by 100% of the recipients is a good place to start. However, that is not an out to say, well, I don't need to communicate because it's never going to be enough. Actually, it's a starting position of whatever I do, it's a leaky bucket. There's always going to be more so actually being prepared to over, communicate, communicate in every channel, multiple forms and help people apply it.
So it's about drop in sessions where people are in control. It's about making sure it's in different environments for people as well. So many employees have no experience of walking into meeting rooms or into offices and sitting down and having a conversation in that context. So immediately they're on the back foot. And if you're being genuine and trying to find solutions with individuals and consult on an open basis, oftentimes going to their workspace or asking them how they would like to consult or communicate with you, you'll find yourself having coffee chats in corners or encountering each other and just sharing ideas.
Certainly, also, it's the time thing as well. If you go into a process and you've got a well-defined schedule, it's helpful for people because they know what's coming next and they feel less at risk or in danger because they know what to prepare themselves for. But it's not about being tied to that schedule either. It's about making sure that the individual is in charge of that schedule and they can communicate in and around it in any way that they want.
So the number of times that I've got texts and calls at the weekend, in the morning, late in the evening, where something occurs to somebody and they're not able to sit on it because it's something that's important to them at that point in time. And actually to get a good process, it's useful to keep that conversation flowing. I think the other thing which I've seen grow in usefulness and I think that's probably in the way in which we've been delivering it, is around F.A.Q.s and being really clear about how F.A.Q.s are going to be produced.
And oftentimes it's not a genuine frequently asked question, it might only be asked once, but it might be such a good articulation of something which you can see individuals struggling with that you know, if you provide it back to the overall group who are in consultation, it will help them. And so just listening constantly to the questions which are being asked and might not be asked, but are obviously on people's minds and trying to provide an open answer about it. Certainly leaning into plain English and making things really simple and not moving into business speak is just good practice in general. But it's also useful to know that sometimes people will read something absolutely understand and be able to read it. Back to you. But will still want to be told it. Still want to ask you, does that mean me as well? So it's all about the application piece as well. So I suppose the only tips that I have are to communicate in every way possible, at every point possible. And just keep communicating until people tell you they don't want to hear from you anymore, which genuinely happens quite often. But I don't take too much offence at it.
Kris has been incredibly helpful. Thank you so much for your time and for joining us to share your tips. How can people get in touch with you?
E-mail me on [email protected]. Just get in touch.
Thank you very much for your time, Kris.
Thanks for having me.